The writing appears to be pretty much on the wall for low-cost Icelandic airline WOW Air tonight. Last Thursday, the airline announced the unwelcome news that U.S.-based private equity firm Indigo Partners which holds stakes in several other low-cost airlines had pulled out of a rescue bid which had been months in the planning.
In a last-ditch effort, the airline – which had already turned its back on a separate deal with Icelandair once already – said it would go back into talks with Icelandair in an attempt to forge some sort of deal. Several days later and the two airlines issued a joint statement, pointedly announcing that a deal would “not materialize”.
It seemed like WOW Air had nowhere else to turn. The cash-strapped airline, which reported a loss of USD $33.6 million in the first nine months of 2018 had run out of potential suitors. If an investor like Indigo Partners, which has a lot of experience in airline turnarounds didn’t want to touch WOW Air then who would?
Whether WOW Air was stalling for time or was hoping to strike a deal with its lessors, the airline issued a statement on Sunday saying it was in “advance(d) discussions with the aim of reaching an agreement on a voluntary restructuring including an agreement of converting current debt into equity and fund the company towards long term sustainability.”
WOW Air said it would give an update the following day. Monday came and went without any update from the airline. WOW Air was silent on social media and its media team didn’t respond to requests for comment.
Instead, rumour and speculation were rife. One of WOW Air’s fleet of just 11 aircraft (the airline reduced its fleet from 20 aircraft last year) has been repossessed in Canada. There has been talk of WOW Air flying its aircraft back to Reykjavik as analysists wait for bankruptcy announcement.
Frustrated passengers, who have tried to contact the airline to find out the status future bookings, have been stonewalled by the airline. Potential customers are being warned not to book flights with ailing carrier only compounding WOW Air’s financial problems.
How WOW Air is meant to get out this mess now is the millionaire dollar question. Many suspect it won’t and with its collapse, another low-cost long-haul airline will bite the dust.
